This is an action to recover $60,448.57, plus interest, as compensation for the use and occupancy of certain land by defendant during the period from April 13, 1942, to December 31, 1945. Plaintiff, a Massachusetts corporation, had at some time prior to April 13, 1942, leased from the New York Central Railroad Co., hereinafter referred to as the railroad, two non-contiguous parcels of land in Allston, Massachusetts.
Defendant, after some negotiations with plaintiff, through the Navy Department, began occupancy of the premises on April 13, 1942. On July 9, 1942, a lease dated April 13, 1942, which had been prepared by defendant and executed by both parties, was forwarded to plaintiff. In it the premises were described as "Buildings at # 99 and # 241 Lincoln Street, Allston, Massachusetts, containing approximately 121,588 square feet of space". Defendant used and occupied, during the period here involved, the buildings, platforms, and open areas, or the approximately 190,242 square feet above referred to.
Plaintiff contends in suit (1) that as the lease did not cover the open land and platforms used and occupied by defendant, but referred only to Buildings No. 99 and No. 241 containing approximately 121,588 square feet of space, there is an implied contract under which defendant is obligated to pay a reasonable rental for the additional space; or (2) that the use and occupancy of such space by defendant constituted a taking of private property for public use, for which plaintiff is entitled to just compensation under the Fifth Amendment. Defendant takes the position (1) that the lease is ambiguous, and parol evidence is admissible to clarify the ambiguity in the description of the property; (2) that the lease as thus clarified included all of the land used and occupied by defendant; and (3), in the alternative, that because of mutual mistake, the lease is subject to reformation to show the true intent of the parties.
The proof shows that in the early part of 1942, plaintiff had under lease from the New York Central Railroad Company two parcels of land in Allston, Mass., known as No. 99 and No. 241 Lincoln Street, respectively. The area known as No. 99 Lincoln Street consisted of a large building covering 47,267 square feet, a platform and ramp covering 6,340 square feet, and an open land area of approximately 45,000 square feet, which were used by plaintiff for automobile unloading and storage purposes.
Plaintiff's lease to the second area, No. 241 Lincoln Street, covered only buildings and a loading platform, together with the right to use the railroad sidetracks adjoining the platform, and the right of ingress and egress for men and automobiles from the buildings and platforms to Lincoln Street.
Defendant was limited, by the provisions of Section 322 of the Economy Act of June 30, 1932, 47 Stat. 382, 412, 40 U.S.C.A. § 278a, to the payment of rentals not to exceed 15 percent of the appraised fee value of the leased premises. An appraisal for the purpose of compliance with the statutory limitation fixed the fee value of the premises, including the land in question covered by plaintiff's bid, at $158,000. The price quoted in the bid amounted to $9,550 for three months, or $38,200 per annum. The maximum rental authorized by law for the premises appraised at $158,000 fee value was $5,925 for three months, or $23,700 per annum.
On March 30, 1942, the Supply Officer of the Boston Navy Yard advised plaintiff by letter that its bid exceeded the 15 percent statutory restriction, and in view of that fact, it was necessary that condemnation proceedings be instituted. On April 1, 1942, plaintiff's president wrote the following letter to the Supply Officer:
On April 10, 1942, plaintiff confirmed by letter a telephone conversation of the same date giving defendant authority to "occupy the premises at 99 and 241 Lincoln Street, Allston, Massachusetts, Monday, April 13, 1942." In this letter plaintiff indicated its understanding that a lease would be submitted at a later date, to be adjusted as of date of occupancy on the basis of plaintiff's revised bid of April 1, 1942.
On April 13, 1942, defendant went into possession of the premises at No. 99 Lincoln Street, and a few weeks later it went into possession of the buildings and platform at No. 241 Lincoln Street, with the exception of the First Aid Building, which was used by plaintiff as an office.
A draft of a lease dated April 13, 1942, was prepared by the Office of the Judge Advocate General of the Navy, sent to plaintiff for its execution, signed by plaintiff and returned to defendant for its execution, and on July 9, 1942, the lease executed by both parties was forwarded to plaintiff. It covered a period from April 13, 1942, to June 30, 1943, with the right of renewal by defendant on thirty days' notice, and provided for a rental price of $23,700 per annum. The premises were described in the lease as "Buildings at #99 and #241 Lincoln Street * * * containing approximately 121,588 square feet of space."
The area mentioned in the lease, i. e., 121,588 square feet, included only the buildings on the two premises. It did not include any platforms or open land areas. As described in finding 10, defendant, beginning on April 13, 1942, used and occupied the buildings, platforms, and open land areas, or a total area of approximately 190,242 square feet of space.
Plaintiff made no protest that the defendant was occupying more space than it was entitled to under the lease until October 14, 1943, a year and a half after defendant first
Prior to the date of this letter, the lease between plaintiff and defendant had been renewed for the period from July 1, 1943, to June 30, 1944, by notice dated May 15, 1943. The description of the premises and the annual rental provided in the lease were not changed. Plaintiff accepted this renewal without protest and with knowledge that defendant was then and had been occupying and using the entire 190,242 square feet of space. Shortly after June 1, 1944, plaintiff received a notice of renewal of lease from July 1, 1944, to June 30, 1945, in which the description of the leased premises had been changed to "Building and Land * * * containing approximately 190,242 square feet of space, said area being all of the land leased to the lessor by the New York Central Railroad * * *." Plaintiff's president testified that this form of renewal was not acceptable to it. However, defendant continued to pay and plaintiff continued to accept, without protest, the rental price of $23,700 per annum.
In May of 1945, plaintiff received a notice of renewal of lease dated May 28, 1945, stating:
Plaintiff's leases from the railroad were canceled by the railroad as of December 31, 1945, following which date defendant leased the premises which it had been occupying and using directly from the railroad.
As heretofore stated plaintiff seeks to recover the reasonable rental value of the land used and occupied by defendant which it claims was not included in the lease to defendant, either on the theory of implied contract or under the Fifth Amendment. The defense to these claims is that the lease is ambiguous; that parol evidence is admissible to clarify the ambiguity, and that the lease as thus clarified included all of the land used and occupied by defendant. Alternatively, defendant urges that the instrument would seem to be subject to reformation in the light of the evidence to show the true intent of the parties, on the ground of mutual mistake with reference to the original description in the lease of the leased premises.
We are of the opinion that the latter contention of the defendant is fully supported by the evidence of record. Without undue repetition of the facts heretofore stated, the proof is clear and convincing that plaintiff intended to lease to defendant, and that defendant intended to lease from plaintiff, all the property plaintiff had under lease from the railroad at No. 99 and No. 241 Lincoln Street,
Under such circumstances, this court may, in the exercise of its equitable jurisdiction and for the purpose of awarding
Plaintiff argues that the sole remedy of defendant, on its contention that the lease as written did not state the true contract, is a Bill in Equity to reform the contract. We are of the opinion that there is no sound reason, where the ground for reformation is established by clear and convincing evidence, Ivinson v. Hutton, 98 U.S. 79, 25 L.Ed. 66; Adams v. Henderson, 168 U.S. 573, 18 S.Ct. 179, 42 L.Ed. 584; why reformation should not, in a suit in this court on the contract be available to the Government as a defense. Metropolitan Casualty Ins. Co. v. Friedley, D.C., 79 F.Supp. 978; 5 Williston on Contracts, Rev. Ed., Sec. 1599; see also Fitch v. Lomay, Tex.Com.App., 16 S.W.2d 530, 66 A.L.R. 763. The granting by this court of such relief in proper cases, to either party, promotes substantial justice according to the merits of the case.
Plaintiff finally contends that defendant, by filing a general traverse to the petition in the instant case, has waived its right to assert the defense. There is no merit to this position. If we assume, however, that the defense should have been specially pleaded, as plaintiff argues, failure to do so is immaterial where, as here, evidence of the defense was introduced and not objected to for failure to plead it, and no surprise is claimed. American Casualty Co. of Reading, Pa. v. Morris, D.C., 51 F.Supp. 889, affirmed, Simon v. American Casualty Co. of Reading, Pa., 4 Cir., 146 F.2d 208; Tillman v. National City Bank of New York, 2 Cir., 118 F.2d 631; cf. Metropolitan Casualty Ins. Co. v. Friedley, supra.
We hold, therefore, for the reasons expressed herein, that under the true terms of the lease agreement, as understood and intended by both parties, the defendant is not liable to plaintiff for additional rental for use of the premises in question or for the payment of just compensation for the taking of such premises.
The petition is therefore dismissed.
It is so ordered.
JONES, Chief Judge, and HOWELL, MADDEN and WHITAKER, Judges, concur.